NEW YORK - The Nasdaq composite closed above 5,000 for the first time since its dot-com era peak nearly 15 years ago after merger news and an encouraging economic report helped push U.S. stocks broadly higher on Monday.
The S&P 500 closed up 12.89 points, or 0.6 percent, to close at 2,117.39. The Dow Jones industrial average rose 155.93 points, or 0.9 percent, ending at 18,288.63. Both indexes set new record highs on Monday. The Nasdaq rose 44.57 points, or 0.9 percent.
The major indexes rose from the start, with the Nasdaq passing the 5,000 milestone shortly before noon. The tech heavy index then dropped, before rising toward the close to end at 5,008.10, just 40 points from its March 2000 record.
Investors cheered a report from the government showing household incomes rose in January, though they spent less than a month earlier. Consumer discretionary stocks rose 1.2 percent on the news, the most of the 10 industry sectors of the Standard and Poor's 500 index.
"Today, it's about the consumer," said David Joy, chief market strategist at AmeripriseFinancial. "Consumers appear to be feeling a little bit better."
The broad gains on the first trading day of March came after the best monthly advance for stocks in more than three years. The S&P 500 climbed 5.5 percent in February, its biggest gain since October 2011.
In deal news, NXP Semiconductors (NXPI) said Sunday that it's planning to acquire Freescale Semiconductor (FSL) in an $11.8 billion deal. The merger would create the largest supplier of microchips for cars.
NXP's stock jumped $14.67, or 17 percent, to $99.56. Freescale rose $4.25, or 12 percent, to $40.36.
Boards of both companies have already approved the deal. Regulators still need to sign off on it.
In the U.S. government report, the dip in consumer spending in January was the second monthly drop in a row. But adjusted for inflation, spending rose. And analysts are expecting the strong income gains will lead to more spending the rest of the year.
Household income after taxes shot up 0.9 percent in January, the biggest gain in two years.
Investors also were watching developments overseas. The People's Bank of China cut interest rates for the second time in three months on Saturday, trimming the rate for one-year commercial loans to 5.35 percent.
It was the latest measure aimed at propping up growth in the world's second-largest economy. The government has recently cut business taxes and boosted pay for government workers.
Asian stock markets closed higher, but European indexes were mixed.
Other stocks making big moves included Sotheby (BID), which sank after the auction house posted a big drop in quarterly earnings. Higher expenses weighed on the company's profits, which came in below analysts' estimates. Sotheby sank 61 cents, or 1.4 percent, to $43.34.
In the bond market, prices for U.S. government bonds fell, pushing yields up. The yield on the 10-year Treasury note rose to 2.08 percent from 2 percent late Friday.
The price of oil fell on reports of rising OPEC output, including from a large field in Libya that recently re-started production. Benchmark U.S. crude fell 17 cents to close at $49.59 a barrel in New York. Brent crude, a benchmark for international oil used by many U.S. refineries, fell $3.04 to close at $59.54 in London.
In other futures trading on the NYMEX:
-- Wholesale gasoline fell 8.1 cents to close at $1.897 a gallon.
-- Heating oil fell 8.7 cents to close at $1.887 a gallon.
-- Natural gas fell 3.6 cents to close at $2.698 per 1,000 cubic feet.
Precious and industrial metals ended mixed. Gold dropped $4.90 to settle at $1,208.20 an ounce, while silver slipped 11 cents to $16.45 an ounce. Copper picked up a penny to $2.70 a pound.